Sunday, September 20, 2020

Think Strategically: The OODA Loop

By on April 14, 2020

(Photo by Charles Deluvio on Unsplash)

Leadership Crisis in U.S. and Puerto Rico

The coronavirus pandemic has positioned our leaders in situations that most of them never expected to be in. You see, a crisis moves us; a crisis reveals who the real leaders are. Ultimately, a crisis tests the abilities of a leader. In my book, leaders must adhere to values, not pressure or an obsession with power. As leaders face a crisis, they must understand the context of the crisis and act with awareness, anticipation, and agility. During the coronavirus pandemic, the most significant sign we have seen is a detour sign, life, as we knew it has changed, probably forever and our job now is to find alternate ways of going about our lives. 

The lack of adequate leadership has placed the U.S. and Puerto Rico on the verge of a healthcare and economic collapse. The pandemic reminded me of a term called the OODA Loop, which was a tool developed by military strategist John Boyd to explain how individuals and organizations can win in uncertain and chaotic environments. 

OODA stands for:

  • Observe: actively absorb the entire situation
  • Orient: find mismatches, errors in your previous judgments that come in conflict with the reality of a crisis.
  • Decide: requires the capacity to decide on and adjust the strategy as needed
  • Act: executing the decision. 

To get the best possible results from any action, you need to make sure everyone involved is “In Agreement” with the choices you have made out of conviction and not out of loyalty to a particular person or, worse, party.

The OODA Loop is useful, and during any crisis, “the more smart people you have around you and the more questions you ask, the better your response as a leader will be,” as former President Barack Obama said last week.

It pains me to watch President Trump’s and Governor Wanda Vázquez’s press briefings. They have become the worst examples of leadership in recent memory. President Trump demonstrates a lack of compassion every day that, combined with the delayed action of the federal government, has made the U.S. lose thousands of lives.  

The president is always focusing on the “great job” he says he is doing, anecdotal reports, and the incessant ramblings of nothingness. In my opinion, the novel coronavirus has become his real challenge for re-election, not Joe Biden. Trump is the worst leadership example ever witnessed of any president. 

In the case of Gov. Vázquez, it has become quite clear that she failed management 101. While most of Puerto Rico initially agreed with the initial lockdown order, the follow-up orders defied reason and logic. She eliminated days when people could shop for their necessities, also impacting how the supply chain works, and ultimately closing down the island from Thursday to Monday.

Making matters worse, the now infamous $38 million contract for one million Covid-19 tests with a construction company without any experience in the healthcare sector, and claiming not knowing about it is false. A deal of this size, scope and urgency has to go through La Fortaleza. As we hear more about leadership deficits, we realize that it is a character issue related to an absence of values and need for power as their substitute.

We live in a dysfunctional culture; especially when we take into account these two leaders, who express dysfunctional values during press conferences, versus the solid virtues needed to guide a society in the midst of a crisis. I will highlight some:

The Dysfunctional Values:

  • Acceptance
  • Comfort
  • Control
  • Freedom
  • Happiness
  • Entertainment
  • Entitlement
  • Expression

The Solid Values:

  • Attitude
  • Courage
  • Responsibility
  • Commitment 
  • Integrity
  • Humility
  • Hope
  • kindness
  • Perseverance
  • Teamwork
  • Gratitude
  • Self Regulation

On one side, there is President Trump, who has said I would not wear face masks, and on the other, we have Governor Vázquez with custom-made face masks with the governor’s logo embossed.

Moral courage is doing the right thing in the face of fear.

We don’t just need more leaders—we need better leaders.

Obama said it best. “Speak the truth. Speak it clearly. Speak it with compassion. Speak it with empathy for what folks are going through,” he said in his speech to mayors Thursday. “The biggest mistake any of us can make in these situations is to misinform.”

Week in markets: Wall Street Records Best week since 1974

No one would have predicted that during the apex of the pandemic, the U.S. stock market would have recorded its best week since 1974. As healthcare experts point to a slower rate of new coronavirus cases in both Spain and Italy, as well as a decrease in overall ICU and hospitalizations in New York, investors hope the worst of the pandemic may be over.  

The Federal Reserve last week took additional actions to provide up to $2.3 trillion in loans to support the economy. This funding will assist households and employers of all sizes and bolster the ability of state and local governments to deliver critical services during the pandemic. This action includes a $1.2 trillion junk bond market where lower-rated companies secure funding.

We recommend investors to continue monitoring their portfolios as there are significant opportunities available to those who selectively choose their assets and investments. 

On to the markets, the Dow Jones Industrial Average closed the week of April 9 at 23,719.37, for a gain of 2,667.04 points, or 12.67%, and a year-to-date (YTD) return of minus-16.9%. The S&P 500 closed at 2,789.82, for a gain of 301.17, or 12.1%, and a YTD return of minus-13.6%. The Nasdaq closed at 8.153.58, for an increase of 780.5, or 10.59%,  and YTD return of minus-9.1%. 

The Birling Puerto Rico Stock Index closed at 1,374.84, gaining 297.23, or 27.58%, but for a YTD return of minus-32.54%. Meanwhile, the U.S. Treasury’s 10-year note closed at 0.72%, or 17.74% more, and returned minus-1.2% YTD. The U.S. Treasury’s 2-year note closed at 0.23%, flat versus last week, and a YTD return of minus-1.8 percent.

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The Impact of COVID-19 on the World- Opportunities Galore

We review the impact on the world economies of Covid-19.

  1. U.S. Initial Jobless Claims: On 4/9 at 6.61 million, we must add the 6.87million from last week and another 3.31 million from the previous week, and the total is 16.8 million people claiming unemployment benefits.
  1. Impact to several economic sectors: We note that the worst sector impacted is the energy sector, followed by the finance sector—loss of value from -43.46% to -6.90% in consumer staples.
  2. Impact on what we call “The Beach Sector”: We review hotels, cruise lines and car rentals and note loss in value between -65.70% to -99.39%.

The Final Word: Government of Puerto Rico Practicing Political Censorship

Political censorship occurs when a government or leader of a country attempts to conceal, distort, cherry-pick or falsify information that the citizens receive by suppressing or crowding out political news the public might receive through news outlets other than the government news agency. Eliminating neutral and objective private news reporting will provide the people of Puerto Rico with a one-sided view of the information. 

The government of Puerto Rico attempts to implement a system-wide suppression of the news due to the scrutiny of the government handling of the Covid-19 pandemic and the $38 million contract that has become highly critical, and the press continues to press for details.

For any governor to implement censorship measures is unacceptable, but to experience it coming from a governor who ascended to the position by chance is even worse. If Puerto Rico needed any evidence as to the extremes an autocratic governor could resort to to impact public opinion; here, you have the live example.

Censorship of the press is preventing the people of Puerto Rico from knowing how dire the coronavirus pandemic truly is, and that is a tragedy.

Being governor is all about character and having the moral courage to carry out the right actions; in both instances, Governor Wanda Vázquez has failed Puerto Rico.

She should be ashamed of herself, and these actions create significant obstacles that impact  the little credibility Puerto Rico had in Washington circles or in the global media.

Francisco Rodríguez-Castro, president & CEO of Birling Capital, has more than 25 years of experience working with government, and multinational and public companies.

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